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National Bank of Samoa Ltd v Poppleton [2025] WSSC 88 (8 September 2025)

IN THE SUPREME COURT OF SAMOA
National Bank of Samoa Ltd v Poppleton [2025] WSSC 88 (8 September 2025)

IN THE SUPREME COURT OF SAMOA
HELD AT MULINUU

BETWEEN:

NATIONAL BANK OF SAMOA LIMITED, an incorporated private company having its principal place of business in Apia, Samoa.

Plaintiff

A N D:

RUSSEL POPPLETON, of Lotopa and Brisbane Australia.

Defendants

Representation: T Lamb for Plaintiff

S Chan Chui for Defendant

Decision: 8^th September 2025

DECISION OF CLARKE J (AS TO COSTS)

Background.

1. The defendant had an overdraft facility with the plaintiff. Clause 4 of the overdraft states:
   • “On demand the Borrower/s will pay to the Bank...all moneys as may now or hereafter be owing or unpaid including but not limited to: -
   • ...
   • (b) all legal and other costs charges and expenses which the Bank shall pay incur in connection with this agreement or the recovery of any moneys owing hereunder; and...”
2. The plaintiff demanded full repayment of the facility by 28^th February 2025 by letter dated 17^th February 2025. Having failed repayment, the defendant was informed on 4^th March that the overdraft was in default and given 14 days to clear the arrears. On 6^thMay, Wallwork Lamb Lawyers for the plaintiff wrote to Fepuleai Law advising that recovery proceedings had been filed and sought confirmation whether the firm can accept service.
3. On the 9^th May 2025, the plaintiff received full payment of the arrears, $30,794.00.
4. When called for first mention on the 9^th June 2025, parties advised the Court that the proceedings had largely been settled, except as to costs. At mentions on 1^st September 2025, the plaintiff with the consent of the defendant discontinued these proceedings, save as to costs. I now deal only with the question of costs.

Costs Claim.

5. The plaintiff relies on clause 4(b) of the Overdraft Agreement to seek costs of (a) $5,000.00 plus VAGST for “[f]iling and serving civil claim in Supreme Court”; (b) $400.00 for “Non-taxable disbursements”; and (c) $1,500.00 plus VAGST for appearance at civil mention on 7^th July 2025 and preparing costs submissions.
6. The defendant disputes the costs claim on the basis that (a) the clause relied on by the plaintiff is not a full indemnity clause covering solicitor/client costs and (b) the costs claimed are unreasonable and excessive. The defendant had offered $1,500.00 in settlement.

Legal Framework.

7. The plaintiff refers to no local authorities to support its claim for solicitor / client costs based on an alleged indemnity costs provision in a contract. My research also failed to identify any local authorities.
8. In New Zealand, contractual indemnity costs are provided for by rule 14.6(4)(e) of the High Court Rules 2016:
   • “(e) the party claiming costs is entitled to indemnity costs under a contract or deed.”
9. There is no equivalent rule in Samoa. However, the point was made In Re Adelphi Hotel (Brighton) Ltd; District Bank Ltd v Adelphi Hotel (Brighton) Ltd [1953] 2 All ER 498 at 502 by Vaisey J that:
   • “It suffices for me to say that I put my judgment on this part of the case, involving as it does a point of construction, on the ground that, as every taxation in which more than one party (in addition to the solicitor) is interested is prima facie a taxation as between party and party, any other basis of taxation is only justified when the party asking for it can show that he is entitled to it, either on some well-recognised principle, or under some contract plainly and unambiguously expressed...”
10. Costs are generally awarded on a party/party basis unless justified by a clear legal principle or an unambiguous contract. In explaining the underlying principles to a contractual indemnity clause, Randerson J in ANZ Banking Group (NZ) Ltd v Gibson [1986] 1 NZLR 556 at 566 stated:
    • “The undertaking in the guarantee for payment of costs of enforcement on a solicitor/client basis is in my view an extending provision intended to entitle the bank to indemnity with respect to legal expenses properly incurred by it in relation to a recovery action under the guarantee. Clearly that contractual obligation is enforceable unless contrary to public policy and I am unable to see how this contractual arrangement could be said to impede the administration of justice or otherwise be contrary to any discernible public policy considerations. To put the point affirmatively, why should a lender be out of pocket as a result of a failure to pay when the parties have expressly provided that he should be indemnified in the event of default by the other...”
11. As the New Zealand Court of Appeal in Watson & Son Ltd v Active Manuka Honey Association [2009] NZCA 595 stated at [17], the general approach In Re Adelphi Hotel (Brighton) Ltd is now encapsulated in rule 14.6. Although Samoa lacks an equivalent to rule 14.6, I accept that a contractual obligation to pay costs beyond party/party is enforceable unless it breaches public policy. Standard clauses requiring informed borrowers to cover a bank’s reasonable legal costs are not contrary to public policy and are common in commercial agreements.
12. The next question then is whether clause 4(b) responds to the plaintiff’s claim for solicitor/client costs. The defendant says the clause is ambiguous because it does not “expressly state that the plaintiff is entitled to recover solicitor and client’s costs in full.”^[1] I do not agree. The defendant has agreed to pay on demand “all legal and other costs charges and expenses which the Bank shall pay incur in connection with this agreement or the recovery of any moneys owing”. The debt recovery is connected to the Overdraft Agreement. The legal fees incurred are connected to the recovery of the debt and by its terms, the plaintiff is entitled to recover “all legal and other charges...” Although not termed solicitor/client costs, the breadth of the language — ‘all legal and other costs’ — is sufficiently wide to and is clearly intended to encompass solicitor/client costs, particularly in commercial banking contexts where such clauses are standard.
13. When a contract allows indemnity costs, the court has no discretion over the amount awarded - doing so would undermine the agreement.^[2] However, the costs must still be objectively reasonable, even if the plaintiff is entitled to recover all legal and other expenses under the Overdraft Agreement. In this sense, Fisher J in Frater Williams & Co Ltd v Australian Guarantee Corporation (NZ) Ltd CA288/92 (28 June 1994) observed at p. 27:
    • “... He cited the decision of this Court in ANZ Banking Group (NZ) Limited v Gibson [1986] 1 NZLR 556(L) and went on to pose the relevant question in the following terms "what is a reasonable amount of costs to be awarded in respect of proper and necessary steps to resolve this issue?" ...
    • I respectfully agree with the test posed by Robertson J so long as it is understood that the word "reasonable" does not import a discretion in the usual sense. The ANZ Banking case supra established that in principle one party may contractually bind itself to pay the other party's full solicitor-client costs. In such a case the Court must decide what tasks attract a costs indemnity on a proper construction of the contract, whether the task undertaken in the instant case was one of those contemplated in the contract, whether the steps taken were reasonably necessary in pursuance of that task, whether the rate at which they were then charged was reasonable having regard to the principles normally applicable to solicitor-client costs, and whether any other principles drawn from the general law of contract would in whole or in part deny the claimant its prima facie right to judgment. These are all matters of objective assessment.”
14. In Black v ASB Bank Ltd,^[3] the New Zealand Court of Appeal identified criteria to assess whether an indemnity costs claim is reasonable stating:
    • “Assessing whether the indemnity costs claimed under a contract are reasonable involves the Court making an objective assessment of these matters:
    • (a) what tasks attract a costs indemnity on a proper construction of the contract;
    • (b) whether the tasks undertaken were those contemplated in the contract;
    • (c) whether the steps undertaken were reasonably necessary in pursuance of those tasks;
    • (d) whether the rate at which the steps were charged was reasonable having regard to the principles normally applicable to solicitor/client costs; and
    • (e) whether any other principles drawn from the general law of contract would in whole or in part deny the claimant its prima facie right to judgment.”
15. While these decisions are not binding, they are persuasive. Applying the test in Black (supra) to the claim for $5,000.00 plus VAGST for “[f]iling and serving civil claim in Supreme Court” and $400.00 for “Non-taxable disbursements”, I am satisfied that (a), (b) and (c) are met, at least in the general sense itemized. Turning to (d), I will assess whether the rate is reasonable

Discussion.

16. Lawyers must charge only fair and reasonable fees, as codified in legislation^[4] and Rule 3.01 of the Samoa Law Society’s Code of Conduct (“the Rules”).^[5] The burden of proving reasonableness lies with the lawyer.^[6] Relevant factors include skill required, urgency, complexity, value involved, time spent, and practice costs.^[7]
17. No itemized bill of costs setting out an hourly rate, specific work performed with the date and time taken to perform that work claimed is provided. The plaintiff and their law firm have agreed to a fixed fee arrangement for the debt recovery process. This is not directly linked to the actual time taken to perform the work required. This is a common billing arrangement between law firms and banks in Samoa, where a bank outsources mortgage preparation, debt recovery and other matters to firms with a fixed fee arrangement in place. The full legal costs are then passed on to customers.
18. As the Court of Appeal stated in Letele v Filia [2011] WSCA 2 (13 May 2011) concerning the reasonableness of an indemnity costs claim, “[t]he bare assertion of what has been charged does not establish reasonableness.”^[8] A blanket fixed fee arrangement between a bank and a law firm passed on to a customer also does not by itself establish reasonableness.^[9]
19. The particulars of the work carried out by counsel for the plaintiff is broad and general.^[10] In the absence of a detailed and itemized bill of costs, like the Court of Appeal in Letele, I am left to make a rough assessment of my own of the work carried out and whether the fixed fee rate charged is objectively reasonable. In my assessment, it is not.
20. In essence, the plaintiff’s claim for legal fees of $6,150.00 relate to the preparation of a Statement of Claim and one attendance at civil mention on the 9^th June 2025 and attendances incidental to these (unspecified). The Statement of Claim, based on a brief Overdraft Agreement, involved straightforward legal drafting and did not require advanced legal expertise. The debt recovery is in no way complex, difficult nor raise any novel issues. The value of the debt involved is not significant and involved no urgency. There will have been limited documents to review and certainly little before the Court to suggest much time needed to draft, settle and file the Statement of Claim. Taking also into account those matters raised by plaintiff counsel in his written submissions 7^th July 2025, by rough assessment, this would involve approximately two hours of work for experienced counsel plus an hour for civil mentions.
21. While the plaintiff counsel’s tax invoice # 966 applies a fixed fee rate, a rate of $500.00 per hour plus VAGST is then applied by counsel for the legal costs submissions.^[11] The debt amount claimed was $30,794.00. I will apply this rate and allow a further hour of attendances in the event that further attendances were warranted, as to reasonableness – four hours in total. This allows for $2,300.00 costs inclusive of VAGST.
22. The plaintiff claims $400.00 for “Office administration / phone / internet / photocopying / toner / MJCA filing fees ($100.00).” While this might appear high given the nature of the recovery proceedings and the little work, papers and resources involved, I will allow this claim as it is not overtly unreasonable. Accordingly, $2,700.00 inclusive of VAGST payable on Tax Invoice 966.
23. I now turn to the further claim for $1,500.00 plus VAGST indemnity costs for costs incurred for the preparation of the memorandum of counsel seeking indemnity costs and attendance at civil mentions on the 7^th of July 2025. It is not clear why these costs are not included in the fixed fee rate applied as these costs form part and parcel of the debt recovery process.
24. I accept that the proper construction of the Overdraft Agreement includes an indemnity on the recovery of costs. While I have found that the indemnity legal costs of $6,150.00 was not objectively reasonable and the fees accordingly reduced to $2,700.00, this is a novel issue that the plaintiff has sought to test in terms of the scope and application of the costs indemnity. While the plaintiff should have compromised on the costs claim, I am not convinced it was unreasonable in the circumstances to pursue the indemnity costs claim given the novel nature of the costs question left for my determination. I will allow the $1,500.00 plus VAGST costs in favour of the plaintiff.
25. In reaching my conclusion concerning the legal fees claimed, I have had regard to an email from the Chief Executive Officer of the National Bank of Samoa, Mr Swann to Mr Lamb dated 18^th August 2025 provided by Mr Lamb. The email commends a transparent fees structure promoting efficiency that also mitigates the “overall expense” to the bank. Further, the fees “are consistent with those charged by other reputable firms engaged in similar work...”
26. I am not privy to the “fee structure” submitted to the bank, however, if this is the level of fees charged by “reputable firms” for basic uncontested debt recovery of this nature passed on in full to customers, it is concerning. The work performed in this case simply does not warrant this level of fees nor does it reflect costs of non-bank debt recovery matters of a similar nature that come before the Court.

Observation on Banking Legal Fee Practices

27. While banks are free to negotiate fixed rate arrangements with law firms, they are entitled to recover against their customers only objectively reasonably incurred costs at objectively reasonable rates for the work involved. Any costs above that are a matter between the bank and its lawyers. One size fixed fee arrangement does not fit all circumstances nor all debt recoveries.
28. This is not the first of these matters where a contractual indemnity clause has been relied on by the bank to seek full solicitor / client costs for fixed billing arrangements. Consistently, no itemized bill of costs is provided to assist the court, except for the lump sum amount itself. This is unhelpful and the Court must then carry out a rough assessment of costs, as I have done here. It is also unhelpful to the bank’s own customers who will also assess whether the lump sum costs claim based on a fixed rate arrangement is reasonable. In this case, Mr Poppleton quite obviously disagrees. In future costs claims like this, it would be helpful for the party relying on an indemnity clause for a fixed rate arrangement to provide an itemized bill of costs of all the attendances to assist the court.
29. Concerns with these types of banking billing practices contributed to the introduction of the legal fee regime in the Lawyers and Legal Practice Act 2014, which specifically included provision to regulate banking billing practices for the “overcharging of legal fees and costs on mortgages and other securities documents.” While fixed fee arrangements are not inherently problematic, the fixed fees charged must be objectively reasonable in relation to the work performed. That is simply not the case here.

Result:

30. The defendant is ordered to pay the plaintiff $4,425.00 VAGST inclusive calculated as follows:
    • (a) legal costs in the sum of $2,300.00;
    • (b) $400 non-taxable disbursements; and
    • (c) $1,725.00 for costs submissions and attendance at civil mention.

JUSTICE CLARKE

^[1] Memorandum of Counsel for the Defendant Opposing the Plaintiff’s Costs on a Contractual Indemnity, paragraph [11].
^[2] Waimauri Ltd v Mahon [2020] NZHC 2310 at [32]. See also Heartland Bank Ltd v Hillend Station Ltd (In Lig) at para. [117] that in assessing whether expenses claimed were “reasonably incurred” includes an assessment as to whether the charge out rates were reasonable...”
^[3] [2012] NZCA 384 at [80].
^[4] Section 5902), Lawyers and Legal Practice Act 2014.
^[5] Rules of Professional Conduct for Barristers and Solicitors of Samoa
^[6] Section 59(40, Lawyers and Legal Practice Act 2014.
^[7] Rule 3.01, Rules of Professional Conduct for Barristers and Solicitors of Samoa
^[8] At paragraph [3].
^[9] There is also no material before the court to suggest that the plaintiff made known to the defendant the legal fee arrangement, structure and quantum with the firm.
^[10] See: paragraph 26©, Memorandum of Counsel for Plaintiff Seeking Contractual Indemnity Costs dated 7^th July 2025 and Tax Invoice dated 30 April 2025, Invoice No. 966.
^[11] See Memorandum of Counsel for Plaintiff Seeking Contractual Indemnity Costs at paragraph [28].